The latest figures show that the gender pay gap in the UK for all employees is 14.9% and 11.9% among full-time employees. In 2021, the pay gap widened.
Many things contribute to the gender pay gap. Women are under-represented in senior, highly-paid roles, which tend to go to men, and are more likely to work in lower-paid roles. Women are also more likely to shoulder the burden of unpaid care work, which reduces their ability to work full-time and delays career progression, especially at certain points in our life.
But when we analysed the entire salary system, we found that just one question disproportionately maintains pay inequality.
While it may seem to be an astute hiring practice to establish a candidate’s previous salary, there is no practical, ethical way to verify self-reported salary history, meaning it may not be quite as strong a bargaining chip as has long been assumed.
Our data from a national survey of 253 people show that over a third of people lie in response to this question, with men more than twice more likely to do so some or all of the time than women (60% vs 25%). A recruitment system that rewards dishonesty sets a poor precedent for future working relationships, and as salary is influenced by a number of variable factors, such as different budgets across different locations, sectors, and organisations, salary information is not a reliable indicator of a candidate’s skills and experience.
Asking this question detaches the salary from the role, its expected outputs, and the skills required to perform it well. Our analysis highlighted that people want to be compensated based on their skills and fitness for the job and the value they bring to the role, not based on their previous salary, and that basing offers on former salaries damages trust. Almost 80% of our survey respondents felt uncomfortable (39.9 %) or extremely uncomfortable (32 %) when prospective employers asked them questions about their current salary. When asked how they felt about the statement the ‘salary history questions are an unfair way to determine someone’s salary,’ the overwhelming majority of our respondents strongly agreed (56.2%) or agreed (34.3%).
Trust has been shown to be one of the main reasons businesses keep or lose their staff, and research suggests that the average cost of losing an employee is over £30,000.
Salary history also perpetuates wage inequality, as if a candidate was previously underpaid, your organisation risks inheriting and embedding discriminatory practices and pay inequality into your own culture. In the US, 19 states including Washington, New York and California have legislated to ban employers from asking salary history. Direct side-by-side comparisons of these states with their neighbours over three years revealed that the move resulted in an average 8% pay increase for women and a 13% pay increase for Black employees. Turnover rates stayed the same, suggesting that organisations can still hire suitable candidates as efficiently as they could previously.
While pointing out that further research would be needed to see if this effect persists, one of the paper’s authors, Professor James Bessen, told Fawcett the study “finds that salary history information is a substantial cause of the perpetuation of wage inequality and it appears to have narrowed the wage gap for job changes in the few years since these bans went into effect”.
We are asking employers to sign our pledge to agree not to solicit current salary information from prospective employees.
This is a simple, deliberate and specific action, backed by evidence, which you can take to reduce pay inequality. It will will boost your reputation and brand by showcasing a forward-thinking, inclusive culture that is serious about attracting and retaining the best staff who will deliver the best outputs for your clients, whatever their background.